Energy Eye – April 2015

This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

13/04/2015

Nadeem Arshad

Nadeem Arshad

Partner

This update contains brief details of Government and EU publications, legislation, cases and other policy developments in England and Wales relevant to those interested in energy, renewables, energy efficiency and the alternative energy sector, which have been published in the past month.

Items are set out by subject, with a link to where the full document can be found on the internet. All links are correct at the date of publication.

If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.

The following topics are covered in this update:

   Carbon Capture and Storage    Heat Networks
   Community Energy    Permitting and Licensing
   Electricity Market Reform    Procurement
   Energy Efficiency    Regulation
   Energy Policy    Renewable Energy
   Environmental Liability    Shale Gas
   Feed in Tariffs    Smart Metering
   Fuel Poverty    Wind Energy

Carbon Capture and Storage

DECC: Next steps in CCS – Policy scoping document: Summary of responses: the Next Steps in CCS Policy Scoping Document set out the Government’s intention for continuous engagement with the industry and sought views on a possible Phase 2 of CCS deployment. This document summarises the responses received and highlights recent steps taken by the Government to progress the development CCS in the UK. (26 March 2015)

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Community Energy

DECC: Community energy strategy update: sets out how the Government has begun a rolling programme of action to address the barriers to community energy deployment, and has introduced new policies and programmes as well as improving existing ones. (19 March 2015)

DECC: Overview on co-operative societies and community benefit societies: this short note on society models available to the community energy sector provides information to community groups who wish to develop their community energy projects through the mutual society form. (19 March 2015)

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Electricity Market Reform

Contracts for Difference (Allocation) (Amendment) Regulations 2015 (SI 2015/981): these regulations, which come into force on 27 March 2015, amend SI 2014/2011 to enable the Secretary of State to implement the policy of a Non Delivery Disincentive (NDD) in respect of the allocation of Contracts for Difference (CFD) under Parts 2 to 9 of the 2014 Regulations. They also correct a cross-referencing error. The NDD is intended to incentivise applicants who have been successful in the CFD allocation process to sign the CFD offered to them and to minimise the risk that those who enter into a CFD fail to deliver the project. (26 March 2015)

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Energy Efficiency

Which?: A local approach to energy efficiency – Implementing the locally-led, area-based approach with a new supplier obligation and Green Deal: this report calls for the next Government to radically re-think its energy efficiency strategy to help millions of consumers ensure their homes are better insulated. Its suggestions include: switching to a long-term local approach, partly funded by a long-term levy on energy suppliers and allocated to local authorities for them to lead the roll-out of energy saving measures from 2017; and an overhaul of the Green Deal scheme. (31 March 2015)

DECC: Approaches to ESOS audits: best-practice advice for organisations on how to exploit the flexible framework that the Energy Savings Opportunities Scheme (ESOS) provides to maximise cost saving benefits. It provides example approaches to consider when planning and undertaking energy audits under ESOS. (27 March 2015)

DH: Making energy work in healthcare (HTM 07-02): technical guidance on managing responsible energy use within the health sector, including procurement and energy use considerations for new and existing facilities. It provides information on mandatory requirements by legislation, best practices in energy efficiency, as well as relevant case studies. (25 March 2015)

DECC: Third release of popular Green Deal Home Improvement Fund fully allocated: announces that the £70m available through the third release of the Green Deal Home Improvement Fund has been fully allocated. An additional £5m, remaining from release two of GDHIF, is being made available immediately so householders can continue to apply for funding to make energy saving home improvements. (26 March 2015)

Coalition For Energy Savings: Implementing the EU Energy Efficiency Directive – Latest analysis of Member State plans for end-use energy savings targets: (18 March 2015) 

Energy Efficiency (Domestic Private Rented Property) Order 2015 (SI 2015/799): this Order, which comes into force on 1 April 2016, introduces measures to improve the energy efficiency of private rented property in England and Wales. It enables the tenant of a domestic private rented property to request their landlord’s consent to the tenant making energy efficiency improvements to the property, and places a duty on the landlord not to unreasonably refuse such consent. It also provides that a landlord of a property which falls below an EPC rating of E may not let the property unless prescribed exemptions apply. (20 March 2015)

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Energy Policy

DECC: Post legislative scrutiny of the Energy Act 2010: this memorandum provides a preliminary assessment of the 2010 Act that implemented the Government's Low Carbon Transition Plan. It looks at how the Act has tackled three long term energy challenges facing the UK: keeping energy supplies safe sustainable and secure; maximising economic opportunities; and protecting the most vulnerable consumers. (23 March 2015)

HC Environmental Audit Committee: A 2010-15 progress report: reviews the Committee's work programme during the last Parliament, which has focused on environmental and sustainability issues. The report summarises the Committee's inquiries on a very wide range of different subjects and highlights issues arising that may require further monitoring and scrutiny, as well as wider ranging issues that affect the future prospects for sustainability more deeply. It also discusses areas for further scrutiny in 2015–2020 that the next Environmental Audit Committee may wish to consider. (18 March 2015)

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Environmental Liability

Environmental Damage (Prevention and Remediation) (England) Regulations 2015 (SI 2015/810): these regulations, which come into force on 19 July 2015, revoke and consolidate the Environmental Damage (Prevention and Remediation) Regulations 2009 (SI 2009/153) and amending instruments, which transposed the Environmental Liability Directive 2004/35. The Directive's objective is to make operators of activities which cause environmental damage financially liable for that damage (the ‘polluter pays’ principle). The consolidated regulations apply to serious environmental damage to land, water and to species and habitats. They cover both species and habitats protected by the Birds and Habitats Directives and any other species and habitats protected on SSSIs. They impose duties on operators of economic activities to take immediate steps to prevent damage if there is an imminent threat, and to control damage which is occurring so as to limit its effects. Once environmental damage has occurred, the regulations contain procedures for establishing appropriate remedial measures. The key changes made following responses to the consultation include: adjusting the regulations to provide greater clarity as to the roles of the respective enforcing authorities, underpinned by a proposed revision to the existing Memorandum of Understanding between the bodies; and a proposal to clarify, in guidance, the definition of “operator” to take account of offshore oil and gas operators and licensees.
See also DEFRA's Revised Transposition Note for the implementation of Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage that explains how the new regulations meet the requirements of the Directive. (23 March 2015) 

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Feed in Tariffs

DECC: Guidance on community ownership models under the Feed-in Tariffs scheme: guidance for communities considering applying for support under the community provisions of the FITs scheme, and for non-community organisations who are considering shared ownership of a renewable energy installation along with a community. It gives a summary of the scheme’s new community provisions from 1 April 2015, and an assessment of how they apply to the main types of community and shared ownership models. It also signposts other guidance on partnership working between commercial and community organisations relevant to applying for support under the FITs scheme. (27 March 2015)

DECC: Dispute resolution processes for feed-in tariff complaints raised by generators: a number of different organisations and processes are involved in the delivery of the Feed-In Tariffs (FITs) scheme. This guide details the complaints procedures for each of the organisations involved, according to the different types of issues that may be raised by people who are, or intend to be FIT Generators, to help establish who they need to contact to resolve their issue. (2 April 2015)

Ofgem: Feed-in Tariff (FIT) – Guidance for renewable installations: version 8 of the guidance for owners of solar PV and wind installations with a Declared Net Capacity over 50kW up to a Total Installed Capacity (TIC) of 5MW, and all anaerobic digestion and hydro installations up to a TIC of 5MW. It provides an overview of the FIT scheme, its eligibility criteria and explains the process of seeking accreditation and preliminary accreditation. (30 March 2015)

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Finance

HM Treasury: Budget 2015: the Chancellor has presented his Budget for 2015. Announcements of interest for those in the energy sector include:

  • negotiations on a Contract for Difference for Swansea Bay Tidal Lagoon to determine whether the project is affordable and value for money for consumers, and whether it will drive down costs for tidal lagoon energy in the UK;
  • compensation for small-scale feed in tariffs for energy intensive industries to be brought forward to the earliest point at which State Aid approval is received in 2015-16;
  • £1.3m funding for the Big Energy Saving Network (BESN) in 2015-16, to help 100,000 vulnerable people cut their energy bills; 
  • introduction of new legislation in the next Parliament for competitive tendering of onshore electricity transmission infrastructure;
  • initial £60m investment in a proposal by six universities in the Midlands for a new Energy Research Accelerator, to develop the energy technologies of the future, plus support for a new Energy Systems Catapult in Birmingham, which will bring together researchers and industry in order to develop new technologies and products;
  • the Landlord’s Energy Saving Allowance will no longer be available beyond 31 March 2015 for corporate landlords and 5 April 2015 for unincorporated landlords of let residential properties;  
  • cancellation of the fuel duty increase scheduled for September (yet again).

(18 March 2015)

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Fuel Poverty

DECC: Piloting local fuel poverty innovation: gives Information on the role of partnership and learning in the renewed strategic approach to tackling fuel poverty in England. This will be of interest to partners who want to respond to a survey seeking views on how to shape the aims and objectives of future pilot funding. (26 March 2015)

DECC: The Central Heating Fund – Guidance for local authorities: invites local authorities, working with their local partners, to apply for a share of £25m capital funding to be used to improve the housing of those in fuel poverty living in their area. The CHF aims to incentivise the installation of first time central heating systems in fuel poor households who do not use mains gas as their primary heating fuel. The guidance includes a detailed list of eligibility criteria. Funding will be allocated by June 30 2015 through grants to the lead authority under s.31 of the Local Government Act 20031. Projects should be completed by April 2016. The closing date for applications is 5 June 2015. (26 March 2015)

Warm Home Discount (Miscellaneous Amendments) Regulations 2015 (SI 2015/652): these regulations, which come into force on 11 March 2015, amend SI 2011/1033 to extend the operation of the Warm Home Discount scheme for a further year, until 31 March 2016. They also make some minor amendments to the operation of the scheme and make minor consequential amendments to the related Warm Home Discount Disclosure Regulations (SI 2011/1830). (10 March 2015)

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Heat Networks

Which?: Turning up the heat – Getting a fair deal for District Heating users: this report raises concerns about whether district heating schemes offer consumers a fair deal. Its investigation found widespread consumer dissatisfaction with costs and poor customer service. The report argues that regulation of the district heating industry is necessary and inevitable in the long-term. The issues that district heating customers face mean that the Government must consider measures to regulate the market and to introduce fair pricing. (31 March 2015)

DECC: National Heat Map – Water source heat map layer: gives details of the new Water Source Heat Map that has been developed for local authorities, community groups and private developers to highlight the opportunities for deploying innovative heat pump technology, particularly at larger scales such as heat networks. The map is a new tool on the National Heat Map, which is a publicly accessible, interactive web-based map showing the level of heat demand across England.
DECC has also published Water Source Heat Pumps – Navigating the way: A customer journey for potential developers that includes a flow chart to help those interested in installing a water source heat pump. (25 March 2015)

Heat Network (Metering and Billing) (Amendment) Regulations 2015 (SI 2015/855): these regulations, which come into force on 20 April 2015, amend SI 2014/3120 so as to corrects errors identified by the Joint Committee on Statutory Instruments in their 19th Report of Session 2014-15. They also change the date by which a heat supplier must submit a notification under reg.3(1) of the 2014 Regulations from 30 April 1015 to 30 December 2015. (25 March 2015)

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Permitting and Licensing

Environmental Permitting (England and Wales) (Amendment) Regulations 2015 (SI 2015/918): these regulations, which come into force on 21 March 2015, amend SI 2010/675 to require operators of certain combustion installations to consider whether the installation of CHP or waste heat recovery systems would be cost-beneficial, with the aim to increase energy efficiency. This is implemented through a requirement to include in permit applications for new or substantially refurbished installations a cost benefit analysis which considers cogeneration and waste heat recovery options alongside single generation options. (20 March 2015)

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Procurement

Bevan Brittan byte size procurement updates: we have published a further three articles in our "byte size" legal updates, in which we look at the new Public Sector Directive and implementing Regulations and deconstruct them into a topic based approach. For each topic we provide a brief explanation of the provisions in the new Directive. We also highlight some of their practical implications. They cover:

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Regulation

DECC: Government gets tough on energy market misconduct: announces the coming into force on 13 April 2015 of the Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015 (SI 2015/979) that make it a criminal offence to fix the price of energy at a false level or use inside information to buy or sell wholesale energy products. It will also be an offence to make misleading claims or conceal facts about wholesale energy prices to manipulate the market. The penalties for anyone found guilty of wholesale energy market manipulation or insider dealing in wholesale energy market products are up to two years' imprisonment and / or a fine of up to £5,000. (27 March 2015)

Environment Agency: Offence response options (version 8): this document sets out the enforcement options available for every offence that the Agency regulates, so as to give a complete explanation of its approach to enforcement and sanctioning. it should be read in conjunction with the Enforcement and Sanctions Statement and Guidance. (31 March 2015)

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Renewable Energy

DECC: Draft Renewables Obligation Order 2015: informal technical consultation on the draft RO Order 2015. The changes are intended to consolidate and update the 2009 ROO and introduce changes to biomass sustainability and reporting criteria and outstanding RO transition measures previously consulted on in 2013 and 2014. The Order is intended to come into force on 1 September 2015 (1 October 2015 for the changes to the biomass sustainability changes). The consultation closes on 14 April 2015. (24 March 2015)

Centre for Policy Studies: Central planning with market features – How renewable subsidies destroyed the UK electricity market: this report argues that recent energy policy represents the biggest expansion of state power since the nationalisations of the 1940s and 1950s, and is on course to be the most expensive domestic policy disaster in modern British history. It states that no British Government has yet to produce an analysis demonstrating renewables are the most efficient way of cutting carbon dioxide emissions; neither has any government published any value-for-money analysis to justify the use of high cost private sector capital against a public sector comparator using the State’s balance sheet. Government policies aim to hide the full costs of intermittent renewables, which as a result are systematically understated. Highly subsidised wind and solar capacity flooding the market with near random amounts of zero marginal cost electricity wrecks the economics of conventional power stations. It is therefore impossible to integrate large amounts of intermittent renewables into a private sector system and still expect it to function as such. As a result, the State has stepped in with a patchwork of interventions to support prices. Because revenues are dependent on continued government interventions, private investors end up having to price and manage political risk, imparting a further upwards twist to electricity bills. 
DECC has issued a Response to the report by the Centre for Policy Studies, stating the report ignores the reality of the energy market – it wrongly suggests that we can ditch renewables for gas, with no explanation of where we would source that from. (18 March 2015)

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Shale Gas

HC Environmental Audit Committee: Government response to the Environmental Audit Committee's inquiry into environmental risks of fracking: the Committee's report, published in January 2015, concluded that hydraulic fracturing would be inconsistent with the UK’s carbon emissions obligations. It asked for a moratorium on the extraction of unconventional gas to allow the uncertainty surrounding environmental risks to be fully resolved. The Government states that it has put in place, via the Infrastructure Act 2015, a range of conditions that need to be met before associated hydraulic fracturing can be carried out. It does not agree that a moratorium should be put in place to address potential environmental risks or that the development of shale gas and oil is incompatible with its climate change objectives. Its response replies to each of the report’s 19 recommendations. (26 March 2015)

Task Force on Shale Gas: Planning, regulation and local engagement: the independent task force, headed by Lord Chris Smith, was set up to examine the risks and benefits of fracking for the UK. Its first interim report addresses the existing planning and regulatory system for shale gas and public consultation. It makes a series of recommendations based on the available academic literature, evidence submitted to the Task Force and the many people, businesses, organisations and community groups that it has met. (25 March 2015)

Medact: Health & fracking – the impacts & opportunity costs: this report reviews fracking and its associated activities through a comprehensive public health lens. It examines the direct and immediate effects of fracking on health, the adequacy and capacity of the regulatory system, and the relationship between fracking and climate change. It concludes that fracking poses significant risks to public health and calls for an immediate moratorium to allow time for a full and comprehensive health and environmental impact assessment to be completed. (30 March 2015)

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Smart Metering

DECC: Smart Metering rollout strategy: the strategy sets out the Government’s positions and regulatory proposals to help inform and support a number of decisions that industry will need to take between DCC Live and the completion of the rollout. This document seeks views on a number of proposals to drive SMETS 2 deployment, maximise benefits realisation and improve the consumer experience. The consultation closes on 19 May 2015. (24 March 2015)

DECC: Smart Metering Implementation Programme – Consultation on non-domestic smart metering: The DCC opt-out and the advanced metering exception: seeks views on two issues relating to the roll-out of smart and advanced meters to the non-domestic sector: whether to remove the existing policy which allows suppliers to use communications services other than those provided by the Data and Communications Company (DCC) for any SMETS2 meters they install at non-domestic premises; and Second, the policy position that there should be no extension beyond April 2016 of non-domestic suppliers’ current option to install advanced meters to meet their roll-out obligations. The consultation closes on 15 June 2015. (24 March 2015)

DCC: Consultation on home area network (HAN) solutions – Implementation of 868MHz and alternative HAN solutions: energy suppliers are required to take all reasonable steps to install smart meters in domestic and smaller non-domestic consumer premises by the end of 2020. This paper seeks views on proposals relating to the implementation of HAN solutions that may be required to allow smart metering devices to communicate with each other and to send consumption and tariff information to consumer devices in the premises. The consultation closes on 19 May 2015. (24 March 2015)

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Wind Energy

RenewableUK: Onshore Wind Cost Reduction Taskforce report: RUK established a taskforce to deliver on the onshore wind industry's commitment to taking active efforts to cut the cost of onshore wind energy, pledging to drive down cost and be the lowest cost new build generation technology in 2020. The taskforce reviewed the current underlying costs of onshore wind and identified opportunities to reduce these costs. Its report shows how onshore wind can deliver cheapest electricity of all power sources by 2020. It makes a number of recommendations. (2 April 2015)

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